Ireland: Manufacturing PMI jumps to all-time high in December
The Investec manufacturing Purchasing Managers’ Index (PMI) rose from 58.1 points in November to 59.1 points in December, a record high. The indicator remains further above the 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for almost four and a half years.
December’s increase was driven by a sharp rise in new orders, output and employment. Growth in new orders accelerated to the fastest pace since June 1998 on the back of higher client demand. Higher new orders resulted in a strong increase in output, which has expanded uninterruptedly for 17 months. Employment rose at the sharpest pace on record as manufacturers increased staffing to accommodate higher demand volumes. Backlogs of work accumulated substantially in December despite higher employment. Regarding price developments, higher prices for raw materials resulted in the sharpest rise in input costs in nine months. Manufacturers increased output prices as a result to keep profit margins intact.
Assessing the latest one-year outlook reading, Investec Chief Economist for Ireland Philip O’Sullivan commented:
“Given the strong conditions evident in the manufacturing sector, it is no surprise to see that firms are upbeat about the outlook, with the Future Output index strengthening in December as more than six times as many companies expect to see growth in 2018 as opposed to those who anticipate a decline. With global growth expected to improve to a seven year high in 2018, we think that firms are right to be confident about their prospects for this year.”